Financial News: IMF Raises Global Growth Forecasts

IMF Raises Global Growth Forecasts

01/22/2018 - 10:24:00 (RTTNews)

(RTTNews) - The International Monetary Fund on Monday upgraded its global growth forecasts for this year and the next, reflecting acceleration in global economic activity and the impact of U.S. tax policy changes.

Global output is forecast to grow by 3.9 percent for both this year and the next, up from October projections of 3.7 percent, the IMF said in its World Economic Outlook Update.

The lender noted that the upward revisions to the global outlook arises primarily from advanced economies, where growth is now expected to exceed 2 percent in 2018 and 2019.

The risks to the global growth forecast seems to be broadly balanced in the near term, although it remain skewed to the downside over the medium term.

The U.S. economy is projected to grow 2.7 percent this year versus 2.3 percent seen in a WEO update in October. Next year, growth is seen edging up to 2.5 percent versus 1.9 percent predicted in October.

The revision reflects stronger than expected activity last year, higher projected external demand, and the expected macroeconomic impact of the tax reform, in particular the reduction in corporate tax rates and the temporary allowance for full expensing of investment, it said.

Eurozone is forecast to expand 2.2 percent this year, which is faster than the 1.9 percent predicted in October. Next year, the economy is seen growing 2.0 percent versus 1.7 percent forecast in October.

The stronger outlook was attributed to the stronger momentum in domestic demand and higher external demand.